The Slow Path to No Tariffs, Liquidity, and New Highs

The Slow Path to No Tariffs, Liquidity, and New Highs: Why It’s Time to Go Long

Markets have taken a beating lately — but beneath the volatility lies a bullish setup too good to ignore. Let’s break it down, step-by-step, and make sense of why I believe the smart money should be getting positioned now.

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Why the Selloff? It’s Not Just the Tariffs

Sure, tariffs are dominating the headlines — and yes, they matter. But valuations were stretched. The so-called “Buffett Indicator” (total market cap to GDP) was screaming hot. Technicals were overheated. When markets get frothy, any excuse — like a tariff war — can set off a correction.

But that’s only part of the story.

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Tariffs: The Real Impact (and the Political Game Behind It)

Trump’s sweeping 10% tariffs were a shock, even by his standards. Reciprocal tariffs followed, global markets panicked, and uncertainty soared. But read between the lines: the door to negotiation remains wide open.

Three groups of countries are emerging:

• Aligned: Vietnam, Taiwan, Japan — smaller economies playing ball.

• Undecided: Mexico, India, Australia — grumbling, but open to compromise.

• Holdouts: China, Europe, Canada — with China as the central player.

The market wants a resolution — it rallied hard on a false rumour the White House was easing tariffs, then dipped when it was denied. Still, we closed green. Watch this space.

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The Real Threat: Tariff War or Currency War?

China has now broken the symbolic 7.2 level on the Yuan — a move reminiscent of competitive devaluation in the 1930s. On top of that, they’re selling US Treasuries, just as the US wants yields lower. Coincidence? Hardly.

This isn't just about trade anymore. It's financial brinksmanship.

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Inflation Fears? Overblown.

Here’s a hot take: tariffs are deflationary. They act like a sales tax — pulling growth out of the system. We’re seeing signs of this now:

• Rent is falling.

• Oil has tanked — in part thanks to a likely Saudi-US coordination.

• CPI upside? Very unlikely.

Bottom line: the inflation scare is fading, and that gives the Fed cover to cut rates.

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The Fed’s Next Move: Cutting with Cover

Non-farm payrolls came in soft. Credit spreads are widening. But employment is still solid, and manufacturing’s holding. With inflation low, the Fed is increasingly free to act — and the odds of a rate cut in June are climbing fast.

Behind the scenes? Possibly some coordination with the Treasury. The Fed gets political cover to ease, without looking like it’s bailing out markets. Watch Michael Howell's work on this — liquidity is the real game now.

In the next section we’ll discuss SPX targets and est stocks to buy on the dip.